The following lots of a particular commodity were available for sale during the year:

The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.
What is the amount of the inventory at the end of the year using the LIFO method?
A)$1,685
B)$1,575
C)$1,805
D)$3,815

Question

The following lots of a particular commodity were available for sale during the year:

The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.
What is the amount of the inventory at the end of the year using the LIFO method?
A)$1,685 
B)$1,575 
C)$1,805 
D)$3,815

Quizplus · Accepted Answer

LIFO method assumes that the last units purchased are sold first. Therefore, the cost of the inventory will be based on the cost of the earliest units available. The cost of goods sold will be calculated based on the cost of the most recent units purchased. 
Using LIFO method: 
Cost of goods sold = (750 x $2.00) + (400 x $2.50) + (200 x $3.00) = $2,500 
Cost of inventory = (25 x $3.00) = $75 per unit 
Total cost of inventory = 25 x $75 = $1,875 
Ending inventory using LIFO method = $1,875

The Following Lots of a Particular Commodity Were Available for Sale